Millions of public sector workers to benefit from revised pension offer

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More than a million people are set to benefit from the government's revised proposals for public sector pensions.

Public service workers within 10 years of retirement age on 1 April 2012 will not be made to work longer or suffer any decrease in the pension they receive, although workers may have to contribute more.

People very close to the 10-year threshold may also see some additional protection, under the new offer.

The government's proposal includes a more generous accrual rate - the rate at which future benefits will accumulate – as well as higher "cost ceilings", which will see a limit on contributions paid by the government.

In addition, the offer means low and middle earners working a full career will receive pension benefits "at least as good, if not better, than they get now'.

For example, under the new scheme, a nurse with a salary at retirement of £34,200 would receive a pension of £22,800 each year, compared to only £17,300 under current arrangements.

Long way to go

However, the government remains unchanged on its desire for public sector workers earning more than £15,000 a year to contribute more to their pension. These reforms will be phased in over the next three years from April 2012, and will amount to an average 3.2% extra contribution for each employee.

Public sector contributions to rise by 3%

Danny Alexander, chief secretary to the Treasury, says public sector pension reform is "inevitable".

He says the government has listened to public sector workers, and come up with a deal that he considers "fair and affordable". "The lowest paid and people 10 years off retirement will be protected – and pensions will still be among the very best available," he says.

The government is hoping these proposals will mollify the union chiefs who are planning industrial action on 30 November.

John Cridland, director-general of the Confederation of British Industry (CBI), says: "These proposals offer additional protection to public sector workers, particularly to the low-paid, while still achieving the essential reform which taxpayers need.'

He adds: "It is not in the interests of public sector workers to plough on with industrial action, which would cause significant disruption to everyone."

This article was taken from our sister website Money Observer

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I am not sure where you get these example figures from but they match other media quotes so must be unchecked lies provided by the present government?

I have been a nurse for almost 40 years and retire in 2.5 years time. At that point I will be earning £40,000 as a Senior Nurse and will have 42 years service from 18 - 60 years of age.

My pension estimate, recently provided by the nhs pension service is £20,157?

All a bit strange isn't it?

G Jackson

I am a teacher on a frozen salary of £34,200. When I retire in a couple of years time after 25 years service my pension will be less than £10,000 PA.
A teacher with 40 years service gets the maximum pension of half salary, (currently |£17,100) but, as teachers need a degree, that would mean you retire at a minimum age of 62 assuming you had started teaching straight after University and had no career break whatsoever.

It's all explained here:

Basically if you've got 42 years as a nurse and retire on £40K your pension will be 42/80 * £40K = £21,000 and index linked so you'll probably have a little less than 42 years in the scheme. You'll also get a tax free lump sum of around £63,000.

To put this in perspective, annuity rates for a 65 yr old woman who wants an escalating income (not quite as good as inflation) and wants their spouse to receive 50% of their pension if they die (similarly to the NHS scheme) are around 3.7% at the moment. If you were in a private sector scheme you would need to have a pot worth £570,000 - plus the £63,000 lump sum = £630,000.

This is unachievable for virtually any private sector individual - assuming a 5% increase in the stock market every year, someone would need to save £4500 a year for 42 years to achieve that pension pot.

You are in a very privileged position, and the only "unchecked lies" being told are by the selfish, innumerate public sector unions.

No public sector worker will benefit whether your 25 or 55!!!
We have already been hit with a change from RPI to CPI which is an immediate devaluation of the pension pot.
Now the con-dems are looking at hitting the hardest with further increase to contributions and making us work longer to get less out.
I earn just under 17k a year and currently we are facing a pay freeze, inflation at over 5% and I am now expected to pay anwhere in the region of £20 + on top of what I am already paying out.
Its a joke!!!!

There is still nothing for people who have already retired.
They paid into a pension pot and were told that they would receive a pension which would rise in line with RPI. The government have arbitrarily moved this to CPI with no agreement from the pensioners side.
Everyone agrees that this will mean less money for the pensioners who faithfully paid this every month.
THIS IS THEFT you cannot surely move the goalposts when it suits you, this is not what the pensioners agreed to or were promised.
People about to pay into a pension, BEWARE, the government can apparently pay you less than was agreed at the beginning if they see fit.

Another pack of lies from an incompetent government. I have already lost 10% off my pension already due to the 2 year pay freeze. This government has already rejected the findings of their own experts who say that Public Sector pensions are sustainable and in fact the costs will reduce anyway in the future. The attitude of successive governments has caused retired people to become the worst paid in Europe. Labour was responsible for causing the pensions black holes with their policy of reducing benefits year by year whilst abolishing tax relief on Pension tax credits. Now this Coalition is trying to put the final boot in. Private pension holders have been robbed for years by corporate scheme holidays and excessive charges by providers fully backed by these governments. Apart from the fat cats who have wonderful pension schemes anyone with a grain of sense should abandon these schemes and let the government bear the responsibility for looking after us in our retirement.